Global Electronic Equipment Production
Here is an updated estimate of 2013 electronic equipment production by key region and product type:
- Regionally China produced 44% of the world's electronic equipment last year. The U.S. was second with 20% (Chart 1).
- Computer (27%) and communication (22%) were the two largest equipment categories (Chart 2).
- Electronic equipment production can be computed in two ways – "value added" or "gross shipments" (Chart 3). Country reports (example U.S. Dept. of Commerce) and company financial reports are based on gross shipments. See the discussion of "Calculating Global Electronic Production" below.
- Annual production of electronic equipment by type is given from 2011 to 2013 with a forecast for 2014 (Chart 4).
- U.S.military production by type is shown in Chart 5. Similar data for other equipment categories are available.
This information is from Ed Henderson's just-published 2014 Electronics Industry Report – a large book with detailed information on the global electronic supply chain by country and product. Ed's book gives equipment production by type by year for all major countries. It also provides subcategories for U.S. production.
You may contact Ed at email@example.com
Worldwide Semiconductor Sales Projected at $338 Billion in 2014 (Chart 6)
Worldwide semiconductor revenue is on pace to reach $338 billion in 2014, a 7.2% increase from 2013, and up from the previous quarter's forecast of 6.7% growth, according to Gartner, Inc.
"Semiconductor revenue set an all-time record in the third quarter of 2014, fueled by a strong electronics build for the holiday season," said Jon Erensen, research director of Gartner. "Get ready for a flood of new product introductions, ranging from simple low-cost tablets to high-end ultramobiles and smartphones. Demand for the iPhone 6 and iPhone 6 Plus has been robust, but there is concern for other types of devices planned for the holidays."
While some products may not sell through during the holiday season, Gartner remains bullish on 2014 consumer demand and forecasts 2014 unit production of smartphones and ultramobiles to increase 27.0% and 18.9%, respectively. The semiconductor market is expected to grow 5.8% in 2015, with high inventories in the first quarter of 2015 emerging as the largest concern.
DRAM leads all semiconductors in 2014 with revenue growth of 26.3% and is expected to reach an all-time revenue high of $44.1 billion for the year. DRAM continues its boom-and-bust cycle due to big supply and demand swings. Gartner predicts the next big memory oversupply downturn will hit in 2016, causing DRAM revenue to plummet 25.5%, weakening overall 2016 semiconductor growth to just 1.0%.
Semiconductor Materials Market to Grow from US$44.8 Billion to more than $46 billion in 2015 (Chart 7)
By all accounts 2014 is going to be a good year for the semiconductor industry; current semiconductor revenue forecasts point to mid- to high single digit growth and quarterly device revenues and silicon shipments are stronger when compared to the same period last year. SEMI believes that the semiconductor materials market will trend with the device market, resulting in an increase of three percent this year and a four percent increase in 2015, resulting in a materials market exceeding $46 billion in 2015. Despite two years of consecutive growth the total materials market will remain below its 2011 peak as cost reduction efforts and low overall industry unit growth dampened materials revenues over the past few years.
Unlike last year, all regions are expected to see their materials markets increase this year. Since 2010, Taiwan has been the largest materials market due to its strong wafer manufacturing and advanced packaging base. The region is expected to increase its leadership by growing another seven percent this year. Japan, South Korea, and Rest of World as a group represent nearly 50% of the materials market and have an aggregate forecasted annual growth rate of one percent. Rest of World represents Singapore and other parts of Southeast Asia and represents the largest Packaging Materials market. After increasing four percent in 2013, growth in China is expected to moderate this year to one percent. The remaining portion of the market, Europe and North America, is expected to fair a little better, with an expected three percent growth rate, primarily driven by North America.
Wafer Shipments Forecast to Increase in 2014, 2015, and 2016 (Chart 8)
Rising Annual Silicon Wafer Shipment Forecast
"Silicon shipment levels are robust this year," said Denny McGuirk, president and CEO of SEMI. "We expect silicon shipment volume to set a record high this year, followed by two consecutive years of growth." McGuirk is speaking about the recently completed annual silicon shipment forecast for the semiconductor industry that SEMI publishes.
This forecast provides an outlook for the demand in silicon units for the period 2014–2016. The results show polished and epitaxial silicon shipments totaling 9,410 million square inches in 2014; 9,840 million square inches in 2015; and 10,163 million square inches in 2016 (refer to Chart 8). Total wafer shipments this year are expected to finally exceed the market high set in 2010 and are forecast to continue shipping at record levels in 2015 and 2016.
China Semiconductor Consumption & Local Production (Chart 9)
IC Insights just released annual consumption and local production data for semiconductors in China
Worldwide PC Shipments declined 0.5% to 79.4 million units in 3Q'14 (Charts 10-13)
PC Growth in Mature Markets Was Offset by a Decline in Emerging Markets
Worldwide PC shipments reached 79.4 million units in the third quarter of 2014, a 0.5% decline from the third quarter of last year, according to preliminary results by Gartner, Inc.
"Growth in the mature markets was offset by a decline in shipments in emerging markets, similar to what was seen in the second quarter of 2014," said Mikako Kitagawa, principal analyst at Gartner. "Positive results in Western Europe and North America can be a sign of gradual recovery for the PC industry."
"Consumers' attention is slowly going back to PC purchases as tablet adoption peaked with mainstream consumers. The transition from PCs to tablets has faded as tablet penetration has reached the 40-50% range. In contrast, weakness in the emerging market reflects the saturation in selected consumer segments where they can afford PCs. In the meantime, consumers who don't have PCs likely will buy low priced tablets. This is one of the major reasons for the slow growth in PC shipments in the emerging market."
For the first time, the sum of the top five vendors' share reached two-thirds of the worldwide PC shipments. All top five vendors showed stronger growth compared to the industry average. Scale is one important success criteria for vendors to survive in the PC market. Some vendors have already scaled back or have withdrawn from the PC business — namely, Sony and Samsung — and Toshiba joined them in 3Q'14.
In the U.S. market, PC shipments totaled 16.6 million units in the third quarter of 2014, a 4.2% increase from the same period last year. This was the third quarter in a row with positive shipment growth.
"Consumers' wallets were gradually coming back to PCs, although back to school sales season was not exceptional," Kitagawa said. "More availability of affordable touch-based laptops, price drops of thin and light laptops, and two in one hybrid laptops will attract consumers this holiday season."
Calculating Global Electronic Production
Computing worldwide electronic equipment statistics is conceptually straightforward. That is, define equipment categories for each country and aggregate the results to get global totals. Ideally, the value of imported subsystems for each country should be subtracted to get value-added data and, thereby, erase the misleading double-counting. For example, the value of imported hard disk drives (and other imported hardware) must be subtracted from the gross value of US PC shipments to arrive at the value added by U.S.-based PC producers. Unfortunately, the problem of assembling the required statistics is extremely difficult except for major subsystems such as the above example of hard disk drives. And timely data is impossible to assemble. More importantly, the statistics derived from the value-added approach are not necessarily the most useful benchmarks for industry analyses.
Gross shipment values and units are better market measures for contract manufacturers, competitors, distributors, freight haulers, foreign direct investors (FDI) and municipalities, along with material and component suppliers. For example, mother board suppliers will want to know the number of U.S.-produced PC units and their gross value to roughly evaluate the market potential, knowing full well that many of the boards are imported.
While the gross shipments approach does produce double counting and, therefore, an inflated value of global production, it does produce an accurate picture of both shipments by country and global growth rates. And, as discussed above, monthly gross-shipment statistics are published by my many government agencies and industry associations, thereby providing fresh data on industry trends. Financial reports and trade statistics (also reported in gross terms) supply valuable cross checks. In short, gross-shipment statistics supply the only comprehensive source of timely information in our fast-moving industry.
- Two ways of aggregating global equipment shipments are: value-added and gross shipments
- Value-added is conceptually the most accurate method. But data is unavailable for the vast majority of products and countries
- U.S. PC shipments provide a handy value-added example: imported hard disk drive values would have to be subtracted from total shipments so as not to double count the value of Thailand production
- Aggregating gross shipments creates double counting and inflated world totals, but the data are much more readily available
- Gross shipments provide accurate country data and global growth rates
- Industry participants are much more interested in gross shipments because they give a better insight into potential markets for components, materials, distribution and contract manufacturers, among others
Source: Ed Henderson, Electronic Outlook Corporation & Henderson Ventures